Correlation Between Main Thematic and AdvisorShares

Can any of the company-specific risk be diversified away by investing in both Main Thematic and AdvisorShares at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Main Thematic and AdvisorShares into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Main Thematic Innovation and AdvisorShares, you can compare the effects of market volatilities on Main Thematic and AdvisorShares and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Main Thematic with a short position of AdvisorShares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Main Thematic and AdvisorShares.

Diversification Opportunities for Main Thematic and AdvisorShares

0.89

Correlation Coefficient

Main Thematic  AdvisorShares

Very poor diversification

The 3 months correlation between Main and AdvisorShares is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Main Thematic Innovation and AdvisorShares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AdvisorShares and Main Thematic is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Main Thematic Innovation are associated (or correlated) with AdvisorShares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AdvisorShares has no effect on the direction of Main Thematic i.e., Main Thematic and AdvisorShares go up and down completely randomly.

Pair Corralation between Main Thematic and AdvisorShares

If you would invest  2,048  in Main Thematic Innovation on September 20, 2024 and sell it today you would earn a total of  32.00  from holding Main Thematic Innovation or generate 1.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	4.76%
Values	Daily Returns

Main Thematic Innovation  vs.  AdvisorShares

Main Thematic Innovation

Risk-Adjusted Performance

14 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Main Thematic Innovation are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Main Thematic unveiled solid returns over the last few months and may actually be approaching a breakup point.

AdvisorShares

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AdvisorShares has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, AdvisorShares is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Main Thematic and AdvisorShares

The main advantage of trading using opposite Main Thematic and AdvisorShares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Main Thematic position performs unexpectedly, AdvisorShares can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in AdvisorShares will offset losses from the drop in AdvisorShares' long position.

The idea behind Main Thematic Innovation and AdvisorShares pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.